New counter attack on ‘me-too’ products?

The naughty nineties saw multiple disputes over ‘lookalike’ packaging, with supermarket ‘own labels’ lining up against big brand owners. In the UK at least, the law was found wanting, but do a recent US Procter & Gamble case and the new EU Unfair Commercial Practices Directive herald a fight back by brands?

Topic: Brands

Who: Procter & Gamble, McLane & Co and the UK Government

Where: Ohio and London

When: Q1 2006

What happened:

Two recent developments on either side of the Atlantic might well revive the great "lookalike" debate that raged strongly in the UK back in the '90s.

In the American development, Procter & Gamble settled with retailer McLane in a dispute arising out of P&G's claims that the packaging and get up of no less than three products it distributed were too close for comfort to P&G's equivalent products.

The US equivalent of the UK's "passing of" laws that is normally wheeled out in these cases is the law in relation to the violation of trade dress and unfair competition.

Involved were paper towels called "Towels" that were allegedly too close to P&G's "Bounty" packaging, toilet paper called "Soft'n'plush" which was allegedly too close to P&G's "Charmin" packaging and over-the-counter cold medicines called "DayTime & NightTime Liquid Caps" that looked too much like Vicks' "NyQuil" and "DayQuil" products.

McLane denied the allegation but as part of the settlement they agreed immediately to redesign the packaging of the products in question and pull some of them from the shelves. As one of America's leading distributors of consumer goods to mass merchandisers and convenient stores, McLane had no desire to be locked in a long battle with P&G.

New legs for UK lookalike debate?

Here in the UK, the "lookalike" debate has been revived by the government's recent "consultation" on the implementation of the EU Directive on Unfair Commercial Practices ("UCPD").

The UCPD is undoubtedly the most important EU measure ever for Europe's advertisers and brand owners. The idea is that the general duty and not to trade unfairly will act as a safety net protecting consumers from unfair commercial practices which are not already lawful. It applies to all business sectors and is intended to plug a number of gaps in existing EU and UK consumer protection legislation.

"Deliberately misleading" similarity?

One of the key parts of the UCPD is a list of 31 business to consumer commercial practices which must be prohibited in all EU member states by December 2007, the deadline for implementation of the UCPD across Europe.

Prohibited commercial practice ("PCP") number 13 is as follows:-

"Promoting a product similar to a product made by a particular manufacturer in such a manner as deliberately to mislead the consumer into believing that the product is made by that same manufacturer when it is not".

This is a practice that must be prohibited and to prove the case there will be no need for any other tests to be passed, such as whether consumers have in fact been confused by the similarity between the products.

Criminal lookalikes?

In its consultation document, the UK government has indicated that it is minded to give serious consideration to criminalising all 31 of the prohibited commercial practices of which PCP13 is one. If this happens the offence will be one of strict liability, allowing a trader a defence to the charge only if he can show that he has taken all reasonable precautions and exercised all due diligence to avoid committing the offence.

In light of this, the question remains as to whether the introduction of PCP13 as part of English law, and possibly as a criminal offence and/or the related misleading commercial practice of marketing a product which creates confusion with the other products, might in combination at last satisfy the years-long demands of brand owners for tighter legal controls on lookalikes.

PCP13 certainly looks to beef up existing controls available by way of the law of passing off. For instance it does not, as passing off does, require any form of "misrepresentation," by the defendant, nor does it require that the claimant shows goodwill in the business conducted using the packaging style which is being copied by the defendant.

"Deliberate" requirement

So far so good for brand owners, but there is still going to be a real difficulty in moving protection against lookalikes significantly beyond the current state of affairs.

This is because PCP13 requires that the trader responsible for the alleged look-alike has created the similar looking product "deliberately to mislead the consumer into believing that the product is made by [a competitor]". The use of that word "deliberately" is very likely going to neuter PCP13's impact on current UK law.

Why so?

Firstly, although the UCPD allows it and Germany allows it now, there are no signs that the UK is considering allowing competitors to sue each other for breaches of these laws.

This means that enforcement will continue to be by way of public law prosecutions by bodies such as Trading Standards and the OFT. Secondly, the use of the word "deliberately" looks likely to mean that unless the prosecution has somehow come by way of "smoking gun" evidence that clearly imputes on the part of the defendant a conscious desire to mislead consumers by way of lookalike packaging, the case will fail.

Alternative protection from misleading practices that confuse?

Will brand owners fare any better under the new misleading commercial practice of marketing a product in such a way as to create confusion with any products, trade marks, trade names or other distinguishing marks of a competitor?

Brand owners might be better placed here than under passing off, but they will likely still be reliant on other enforcement bodies to do the claiming for them.

A case will be made out if it can be shown firstly that the effect of the similarity/confusion is to very likely lead the consumer to make a "transactional decision" which he or she would not otherwise have made (in other words buy the product when they would not otherwise have done so) and they can show that actual confusion has arisen, rather than there being the likelihood of confusion.

So here at least there might be a ray of hope for lookalike fighters, but we do not necessarily see any major change for UK law coming from this direction, with US law conferring much greater protection for brand owners on that side of the pond.